XRP Makes Surge Despite Bearish Momentum
XRP has been trading in what would be considered a bearish momentum following several actions that have taken place after the announcement of the lawsuit against Ripple by the SEC. A notable movement was witnessed in the last few hours after the digital assets saw a massive price jump of about 35%. This is coming off the recently announced decision by Coinbase to suspend all the trading pairs of XRP.
One of the notable reasons for the small bullish jump in the price of XRP is known as a short squeeze. Recent data obtained from Bybt.com reveals that traders liquidated up to $96 million worth of XRP futures contracts within 12 hours.
Recent Coinbase announcement was the major trigger
December was a sad day for XRP when Coinbase announced the suspension of trading of XRP, a move Bitstamp and other major exchanges had earlier made. In their official announcement, Coinbase noted that they have decided to suspend the trading of XRP and its pairs on their platform. The crypto exchange based in the United States also mentioned that traders and investors would still have access to their XRP wallets for deposits and withdrawals even after the suspension kicks into effect
The announcement of the delisting of XRP by Coinbase has set a dangerous precedent in the crypto market and could push XRP into dire situations. With Coinbase and a few other crypto exchanges announcing delistings and suspensions of XRP, traders and investors are frantically selling off their XRP holdings since the announcement of the lawsuit.
However, the likelihood of a short squeeze rises when an asset seems to be oversold. This happens when sellers borrow capital to short-sell an asset with leverage but are made to buy back their positions if the price of the digital asset increases. The recent liquidation of $96 million XRP in just 12 hours is a typical example of a short squeeze.
Traders are presently dumping XRP on the market
Meanwhile, some technical analysts had earlier predicted the occurrence of a short squeeze in XRP price. According to a seasoned analyst and crypto trader, Mayne, he noted that this should be expected because traders are now dumping XRP on the market, and there is selling pressure in the market. “Down double-digit % pts in a day, entire feed short say it’s going to 0, price dumped into HTF support, easy punt. SEC crushing XRP would be bad for the space as a whole IMO, but it’s risk specific to Ripple for now. That said, I don’t care to play the chart and sentiment,” he said.
XRP is, in the near term, facing tough resistance levels around $0.24 and $0.26 as the short squeeze reduces momentum. Some analysts predict that the lawsuit that the U.S. Securities and Exchange Commission (SEC) filed against Ripple will have a negative impact on other tokens. “Exchanges delisting $XRP following the SEC lawsuit is worrisome for many other tokens. The big questions now are ‘who comes next?’ and ‘how fast will the SEC move?” Another analyst said.
Adam Cochran at Cinneanhain Ventures agrees with other investors and strategists that the SEC wants to extend the action to other projects and companies. This portends that SEC will possibly file more lawsuits against several crypto companies and blockchain projects, a move that would cause alternative currencies to encounter more pressure.